SAN FRANCISCO — Could seven be the final chapter in the story of Netpulse Media Networks, the company formed from the merger of Netpulse, E-Zone and Xystos? At press time, it seemed that way. Although some efforts were being made to salvage the company, it's possible that, by the time you read this, chapter 7 bankruptcy has ended Netpulse Media Networks.
What went wrong?
People have opinions, but few are willing to go on the record. Some anonymous sources blame E-Zone, saying that the management-heavy company had a spendthrift mentality that drained the funds available to Netpulse Media Networks.
Others argue that Netpulse doomed everybody by being the first company to offer its equipment for free. One anonymous source even said that Netpulse was carrying too much debt at the time of the merger, adding that a lawsuit from Bally (which never received the Netpulse systems it had been promised) forced the merged company into chapter 7. (For its part, Bally denied that it has filed a lawsuit against Netpulse.)
In the hopes of uncovering the real story, Club Industry tried contacting members of the E-Zone camp, including Robert McKenzie (the former CEO of E-Zone who became co-executive chairman after the merger). Our calls were not returned.
We had better luck reaching former Netpulse CEO Tom Proulx, who shared the title of co-executive chairman with Mc-Kenzie. He told Club Industry that the company declared chapter 7 because the merger took too long, the capital ran out, and the market dried up.
Joe Cirulli, the owner of the Gainesville Health and Fitness Center and president of IHRSA, called the bankruptcy a “shame,” saying that both companies offered great products. He is hopeful that they will come up with a support mechanism for the systems that are already in place (such as those installed at Gainesville).
“Obviously, the biggest concern is what happens when the system goes down, and I'm not quite sure the answer to that,” Cirulli said.
This is a good point: Who is responsible for the installed Netpulse/E-Zone systems? Better yet: Who owns them? As one source pointed out, clubs never purchased the systems — even the ones installed before the free offer. Clubs leased the systems.
Does that mean the systems will be left to gather dust? Or will somebody show up one day to remove the equipment as part of a plan to satisfy creditors?
If Proulx has his way, none of that will happen. At press time, Proulx was optimistic that he could raise enough capital to buy back all (or at least part) of the company. His intention is to keep the merged company together, and he claimed that the people from E-Zone are working with him.
“The best outcome for the clubs as well as the new company going forward is to keep it all together,” Proulx said. “The merged company did make sense. There were complementary product lines, there were synergies, and for all those reasons, it still makes sense going forward.”